Justia Civil Procedure Opinion Summaries

Participants in Georgetown University retirement plans sued the University and individual plan fiduciaries, seeking to bring individual and representative class action claims for breach of fiduciary duty under the Employee Retirement Income Security Act (ERISA) 29 U.S.C. 1001–1461. They alleged that the plans paid excessive fees for record-keeping services and included investment options that consistently underperformed their benchmarks. In January 2019, the district court dismissed the complaint without prejudice, citing Article III standing as to some aspects of plan management, such as the inclusion of investment options neither plaintiff had selected. Regarding the duty of prudence, the court found that the excessive recordkeeping fees allegations provided no factual support for the assertion that the plans should pay only $35/year per participant. In May, the court denied as untimely their motion for leave to file an amended complaint.The D.C. Circuit vacated. Dismissal of a complaint without prejudice is generally not a final appealable order. Exceptions that apply where the record clearly indicates that the district court has separated itself from the case do not apply to this case. The January Order did not enter a final, appealable judgment; the district court erred when considering the motion to amend the complaint in refusing to apply the Rule 15(a)(2) standard, rather than the more restrictive standards under Rules 59(e) and 60(b). View "Wilcox v. Georgetown University" on Justia Law

Kathleen Hendrix ("Hendrix"), as administratrix of the estate of Kenneth Morris Hendrix, deceased, appeals a circuit court judgment dismissing Hendrix's medical-malpractice wrongful-death claim against United Healthcare Insurance Company of the River Valley ("United"). Kenneth, who was covered by a health-insurance policy issued by United, died after United refused to pay for a course of medical treatment recommended by Kenneth's treating physician. The trial court determined that Hendrix's claim was preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), because the claim "relate[s] to" the ERISA-governed employee-benefit plan pursuant to which United had issued Kenneth's health-insurance policy. In October 2015, Kenneth was injured in an automobile accident. His physician recommended Kenneth be admitted to an inpatient-rehabilitation facility. Hendrix claimed United "imposed itself as [Kenneth's] health care provider, took control of [Kenneth's] medical care, and made a medical treatment decision that [Kenneth] should not receive further treatment, rehabilitation, and care at an inpatient facility." Instead, Hendrix contended United made the decision Kenneth should have been discharged to his home to receive a lower quality of care than had been ordered by his physicians. Kenneth died on October 25, 2015, due to a pulmonary thromboembolism, which, the complaint asserts, would not have occurred had United approved inpatient rehabilitation. The Alabama Supreme Court concurred with the circuit court that Hendrix's claim related to an ERISA-governed benefit plan, and thus preempted by the ERISA statute. View "Hendrix v. United Healthcare Insurance Company of the River Valley" on Justia Law

The judgment the Second Circuit entered in its initial opinion in this appeal was vacated by the Supreme Court and remanded for reconsideration. The court reinstated the judgment.Plaintiffs, participants in IBM's employee stock option plain filed suit alleging that the plan's fiduciaries breached their duty of prudence under the Employee Retirement Income Security Act (ERISA). The district court granted defendants' motion to dismiss; this court reversed and remanded; and then the Supreme Court granted defendants' petition for certiorari, which presented the question whether a plaintiff can state a duty-of-prudence claim based on generalized allegations that the harm of an inevitable disclosure of an alleged fraud generally increases over time. The Supreme Court also granted the government's motion to participate in oral argument as an amicus curiae in support of neither party, so that it could present the views of the Department of Labor and the Securities and Exchange Commission. After oral argument, the Supreme Court vacated the judgment and remanded, explaining that defendants' and the government's post-certiorari arguments primarily addressed matters that fell beyond the question presented to the Supreme Court, and that had not been raised before this court.The court held that the arguments raised in the supplemental briefs either were previously considered by this court or were not properly raised. To the extent that the arguments were previously considered, the court will not revisit them. To the extent that they were not properly raised, they have been forfeited, and the court declined to entertain them. Accordingly, the court reversed the district court's judgment and remanded for further proceedings. View "Jander v. International Business Machines Corp." on Justia Law

Plaintiffs are retired participants a defined-benefit retirement plan, which guarantees them a fixed payment each month regardless of the plan’s value or its fiduciaries’ investment decisions. Both have been paid all of their monthly pension benefits so far and are legally entitled to those payments for the rest of their lives. They filed a putative class-action suit under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, alleging violations of ERISA’s duties of loyalty and prudence by poorly investing the plan’s assets. They sought the repayment of approximately $750 million to the plan in losses suffered due to mismanagement; injunctive relief, including replacement of the plan’s fiduciaries; and attorney’s fees. The Eighth Circuit and the Supreme Court affirmed the dismissal of the case. Because the plaintiffs have no concrete stake in the lawsuit, they lack Article III standing. Win or lose, they will still receive the exact same monthly benefits they are entitled to receive. Participants in a defined-benefit plan are not similarly situated to the beneficiaries of a private trust or to participants in a defined-contribution plan; they possess no equitable or property interest in the plan. The plaintiffs cannot assert representative standing based on injuries to the plan where they themselves have not “suffered an injury in fact,” or been legally or contractually appointed to represent the plan. The fact that ERISA affords all participants—including defined-benefit plan participants—a cause of action to sue does not satisfy the injury-in-fact requirement. Article III standing requires a concrete injury even in the context of a statutory violation. The Court rejected an argument that meaningful regulation of plan fiduciaries is possible only if they may sue to target perceived fiduciary misconduct; defined-benefit plans are regulated and monitored in multiple ways. View "Thole v. U. S. Bank N. A." on Justia Law

In 2014, Liberty Life Assurance Company of Boston rejected the claim for long-term disability benefits by plaintiff-appellee Michael Ellis. As part of its employee-benefit plan, Comcast Corporation, for whom Ellis worked in Colorado from 1994 until 2012, had obtained from Liberty in 2005 a Group Disability Income Policy (the Policy). Ellis sought review of Liberty’s denial of benefits in the United States District Court for the District of Colorado under the Employee Retirement Income Security Act of 1974 (ERISA). The district court, reviewing the denial de novo, ruled that Liberty’s denial was not supported by a preponderance of the evidence. Liberty appealed, contending the court should have reviewed its decision under an abuse-of-discretion standard but that it should prevail even under a de novo standard. Ellis defended the district court’s choice of a de novo standard but argued he should prevail under either standard of review. The Tenth Circuit determined a plan administrator’s denial of benefits was ordinarily reviewed by the court de novo; but if the policy gave the administrator discretion to interpret the plan and award benefits, judicial review was for abuse of discretion. The Policy at issue provided that it was governed by the law of Pennsylvania, which was where Comcast was incorporated and has its principal place of business. Among its terms was one that gave Liberty discretion in resolving claims for benefits. A Colorado statute enacted in 2008, however, forbade such grants of discretion in insurance policies. The parties disputed whether the statute applied to the Policy under Colorado law, and whether Colorado law governed. The Tenth Circuit held that in this dispute the law of Pennsylvania was controlling. Liberty’s denial of benefits was therefore properly reviewed for abuse of discretion. Under that standard the denial had to be upheld. View "Ellis v. Liberty Life Assurance Co" on Justia Law

The Employee Retirement Income Security Act (ERISA) requires plaintiffs with “actual knowledge” of an alleged fiduciary breach to file suit within three years of gaining that knowledge, 29 U.S.C. 1113(2), rather than within the six-year period that would otherwise apply. Sulyma worked at Intel, 2010-2012, and participated in retirement plans. In 2015, he sued plan administrators, alleging that they had managed the plans imprudently. Although Sulyma had visited the website that hosted disclosures of investment decisions, he testified that he did not remember reviewing the relevant disclosures and that he had been unaware of the allegedly imprudent investments while working at Intel. Reversing summary judgment, the Ninth Circuit held that Sulyma's testimony created a dispute as to when he gained “actual knowledge.”A unanimous Supreme Court affirmed. A plaintiff does not necessarily have “actual knowledge” of the information contained in disclosures that he receives but does not read or cannot recall reading. To meet the “actual knowledge” requirement, the plaintiff must, in fact, have become aware of that information. The law sometimes imputes “constructive” knowledge to a person who fails to learn something that a reasonably diligent person would have learned but section 1113(2)'s addition of “actual” signals that the plaintiff’s knowledge must be more than hypothetical. While section 1113(2)'s plain meaning substantially diminishes the protection of ERISA fiduciaries, Congress must be the one to make changes. The Court noted the “usual ways” to prove actual knowledge. View "Intel Corp. Investment Policy Committee v. Sulyma" on Justia Law

This case arose from plaintiffs' action against NYU, alleging violations of the Employee Retirement Income Security Act (ERISA) in connection with two retirement plans sponsored by NYU (Sacerdote I). After the district court dismissed most, but not all of the causes of action, plaintiffs filed this action against affiliates of NYU and Cammack, an independent investment management company (Sacerdote II). The district court dismissed all claims against defendants.The Second Circuit dismissed the district court's judgment, holding that the district court erred by determining that Cammack and NYU were in privity such that the rule against duplicate litigation applied to bar recovery against Cammack in Sacerdote II. In this case, Cammack and NYU's interests were not sufficiently identical to support a finding of privity; the bases for liability for NYU and Cammack were not necessarily the same; and it was possible that one party could be found liable and the other not. Cammack and NYU had separate and distinct responsibilities as co-fiduciaries to the plans at issue, and could be found liable for plaintiffs' injuries for separate reasons. Finally, the court held that the representative suit exception to a plaintiff's right to sue each defendant separately did not apply here. View "Sacerdote v. Cammack Larhette Advisors, LLC" on Justia Law

Unions set up a pension plan under the Employment Retirement Income Security Act, 29 U.S.C. 1001, with electrical contractors (Revcon) sharing ownership. Revcon withdrew from the plan in 2003. The Multiemployer Pension Plan Amendments Act, 29 U.S.C. 1381, requires employers who withdraw from underfunded pension plans to pay withdrawal liability. The trustees notified Revcon of $394,788 in withdrawal liability and demanded quarterly payments of $3,818. Revcon missed several payments. The trustees accelerated the outstanding liability (29 U.S.C. 1399(c)(5)) and filed suit. Revcon offered to cure its defaults and resume payments. The trustees agreed and voluntarily dismissed the suit under FED. R. CIV. P. 41(a). Revcon made some payments, then defaulted again. The trustees again sued. Revcon again promised to cure; the trustees again voluntarily dismissed. This cycle repeated in 2011, 2013, and 2015. In 2018, after another default, the trustees filed this case, which, unlike previous complaints, only the payments that Revcon had missed since the 2015 dismissal.Revcon argued claim preclusion because the previous complaints demanded the entire liability, which necessarily includes the defaulted payments at issue. The “two dismissal rule” of Rule 41(a)(1)(B) therefore barred any claims arising from that liability, and, because the trustees sought to collect the entire debt in 2008, the six-year limitations period had expired. The trustees countered that they revoked the 2008 acceleration with each dismissal and that the two dismissal rule did not apply because all parties consented to the previous dismissals. The Seventh Circuit found the case untimely, noting that the earlier complaints all stated the withdrawal liability was accelerated in 2008, contradicting an argument that acceleration had been revoked. The statute makes no mention of such a deceleration mechanism. View "Bauwens v. Revcon Technology Group, Inc." on Justia Law

In 1880, the Sisters, a Roman Catholic organization, founded OSF, which provides healthcare to indigent patients. The Sisters maintain authority through OSF’s governing documents and canonical and civil guidelines pertaining to church property. OSF merged with another Catholic hospital with the permission of the Holy See. Both offered employee pension plans before the merger. The Plans, with 19,285 participants, are now closed to new participants. Smith, a former employee and OSF plan participant, sued, claiming that the plans are not eligible for the church plan exemption under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 because they are administered by Committees that are not “principal-purpose organizations” and that the exemption itself is unconstitutional. She alleged that OSF allowed the plans to become severely underfunded; failed to follow notice, disclosure, and managerial requirements; and breached its fiduciary duties. The district court granted the defendants summary judgment despite plaintiff’s Federal Rule of Civil Procedure 56(d) motion to postpone the decision so that she could complete further discovery. The Seventh Circuit vacated. The summary judgment motion was filed long before discovery was to close; plaintiff was pursuing discovery in a diligent, sensible, and sequenced manner; and the pending discovery was material to summary judgment issues. The court’s explanation for denying a postponement overlooked earlier case-management and scheduling decisions and took an unduly narrow view of relevant facts. View "Smith v. OSF Healthcare System" on Justia Law

Knox-Bender suffered injuries from a car accident. She sought medical treatment at Methodist Healthcare. Methodist billed her $8,000 for the treatment. Payments to Methodist were made on Knox-Bender’s behalf by her employer-sponsored healthcare plan, her automobile insurance plan, and her husband’s healthcare plan. Knox-Bender says that the insurance plans had already agreed with Methodist on the price of her care. She claims that, despite this agreement, Methodist overcharged her and that this was common practice for Methodist. She and a putative class of other patients, sued in Tennessee state court. During discovery, Methodist learned that Knox-Bender’s husband’s healthcare plan was an ERISA plan, 29 U.S.C.1001(b) that covered $100 of her $8,000 bill. Methodist removed the case to federal court claiming complete preemption under ERISA. The district court denied Knox-Bender’s motion to remand and entered judgment in favor of Methodist. The Sixth Circuit reversed. The complete preemption of state law claims under ERISA is “a narrow exception to the well-pleaded complaint rule.” Methodist has not met its burden to show that Knox-Bender’s complaint fits within that narrow exception. Since Knox-Bender has not alleged a denial of benefits under her husband’s ERISA plan, ERISA does not completely preempt her claim. Even if Methodist had shown that Knox-Bender alleged a denial of benefits, it would also have show that Knox-Bender complained only of duties breached under ERISA, not any independent legal duty. View "K.B. v. Methodist Healthcare - Memphis Hospitals" on Justia Law